European stocks opened quietly this morning following a toneless trading session in Asia, despite a rate cut from the PBoC in Beijing. Investors are now bracing for a period of higher volatility due to quarterly expirations of options across all asset classes.
With this week’s important data releases and central bank meetings now behind us, investor focus is likely to switch back to the US-China trade dispute consequences, especially after the OECD lowered its global growth forecast from 3.2% to 2.9%. Despite some progress in the bilateral talks at the beginning of September which led to a de-escalating tone from both blocs, a lot of work has still to be done. A recent tweet from China Global Time Editor said US officials misread China’s goodwill as a sign of weakness. That message tells investors to remain cautious on stocks as there is still a lack of understanding between Beijing and Washington.
Photo by Lasma Artmane.
A more optimistic wind is, however blowing in Europe after EU Commission President Jean-Claude Juncker said he remained confident about a potential deal with the UK as he received a new proposal from UK PM Boris Johnson yesterday. Juncker said he was ready to consider removal the Irish backstop if objectives were met by Johnson’s proposals. However, he also added the EU was ready in the event of a “no-deal” Brexit.
Sterling continues its rally towards 1.2570 this morning, but this has not pressured stock prices as the FTSE-100 index continued to consolidate inside its 80pts wide trading range. The market is currently trading slightly above its first available support level located towards 7,310.0pts.
